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Diamond Resorts Management Validation Notice FDCPA Arizona Class Action

Bill with Words "Final Notice" Stamped in Red

Diamond Resorts Management, Inc. collects debts for various owners’ associations of timeshare condos, associations and resorts. In this class action, the complaint alleges that Diamond does not follow the Fair Debt Collection Practices Act (FDCPA) in its collection activities, in particular by not informing consumers of their rights to dispute the debt or any part of it.

The FDCPA Class for this action is

  • All persons in Arizona
  • To whom Diamond sent a written communication in the form of Exhibits 1 or 3 in this case seeking to collect a defaulted debt for a timeshare owners association,
  • Between August 31, 2017 and the service of this amended complaint,
  • Which does not present the mandatory verification and validation dispute rights in 15 USC §§ 1692g(a) and (b), and
  • Failing to identify themselves as debt collectors trying to collect a debt, and stating that any information obtained will be used for that purpose.

Diamond sends collection letters to try to collect on defaulted debt allegedly owed to various owners’ associations. Its “Final Notice” letter, the complaint says, “threatens public liens, foreclosure proceedings, additional collection costs and legal fees, and adverse effects to the [consumer’s] credit rating” although “the amount of such debt is neither explained, detailed, nor legally or contractually justified to the debtor…”

The complaint claims that the Final Notice letter is “the one and only initial contact of consumers” by Diamond. The FDCPA requires that consumers be given certain information, either within the initial contact with the consumer or within five days of it. One of the requirements is that the debt collector provide consumers with notice of their validation rights.

The FDCPA says that the debtor must “send the consumer a written notice containing” the required information, including “a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector…”

Also, “[i]f the consumer notifies the debt collector in writing within the thirty-day period … that the debt, or any portion thereof, is disputed … the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt or a copy of a judgment … and a copy of such verification or judgment … is mailed to the consumer…”

This requirement is important enough that it cannot be “overshadowed” by other language or statements within the letter or subsequent communications, the complaint says.

However, Diamond’s Final Notice letter contains no such validation or verification notice, the complaint says.

It also omits another requirement of the FDCPA, the complaint says: a statement that the communication is from a debt collector, seeking to collect a debt, and that any information obtained will be used for that purpose. 

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